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Articles about quality, environmental and safety compliance issues.

What’s law got to do with it?

Watching the slow motion accident that is the BP oil spill in the Gulf of Mexico, the question on our minds is: What kind of legal action will be taken against BP? And, will it matter?

Dianne Saxe rightly notes that major spills are, in and of themselves, illegal. Though the assertion that BP is one of the most environmentally conscious of the oil company majors doesn’t stand up well to scrutiny when one considers how much lobbying in the U.S. went into opposing drilling safety rules. Saxe also question whether prosecuting BP will improve our standard of care to prevent disaster in the future.

The truth is that prosecuting BP will, of course, be politically expedient. But as Riki Ott, the author of two books on the Exxon Valdez spill, points out, there are some eerie parallels between the Exxon Valdez spill in 1989 and the BP spill, namely with respect to the underreporting of spill volumes:

“Still, penalties are based on spill volume: Exxon likely saved itself several billion dollars by sticking with its low-end estimate of 11 million gallons and scuttling its high-end estimate of 38 million gallons, later validated by independent surveyors.

Sadly, it’s a foregone conclusion that BP’s promise to “do everything we can” to minimize the spill’s impact and stop the oil still hemorrhaging from the well nearly one mile under the sea off Louisiana’s coast will fade as its attention turns to minimizing its liability, including damaged public relations.

BP will likely leverage the billions of dollars it will spend on the cleanup to reduce its fines and lawsuit expenses, despite later recouping a large portion of the cleanup cost from insurers or writing it off as a business expense as Exxon did.

Such tactics saved Exxon billions of dollars in the civil settlement for damages to public lands and wildlife (in which damages were estimated at up to $8 billion; but for which Exxon paid just $900 million) and in the class action lawsuit filed by those whose livelihoods were curtailed by the spill (for which the original jury awarded $5 billion in punitive damages; but which Exxon fought for 20 years until the Supreme Court lessened its burden to just $507 million).

That Supreme Court decision strictly limited corporate liability and essentially removed the ability of future oil spill victims to hold corporations accountable to the people and the law.”

At the end of the day, the lesson from Exxon Valdez — in spite of the many health problems suffered by communities and wildlife — was that there is no appropriate compensation regime in place to cover the extensive damages sustained when an oil spill of this magnitude occurs.